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Self Employed

What is the Sole Proprietor Process For Canada?

Marc Chaput
March 12, 2019
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If you're self-employed, you're likely a sole proprietor. Here's a walkthrough of the sole proprietor process.

What is a sole proprietorship business?

The CRA defines sole proprietorship as the simplest kind of business structure. It is an unincorporated business owned by one person.  The owner makes all decisions and handles all the profits and losses. The owner does not have separate legal status from the business.

How to become a sole proprietor

A sole proprietor operates as an individual or as a registered, unincorporated business. If you do business as an individual, invoices use your own name.  If your business has a name, invoices use your business name. You'll need a separate bank account if you have a business name.

Choosing a business name

The CRA recommends a few things when choosing a business name:

     
  • Make sure it reflects the product or service
    •  
  • Have an idea of the image you'd like to project
    •  
  • Consider a simple, easy-to-remember name
    •  
  • But be original and make sure it isn't taken!

Is my business name available?

The CRA suggests that you:

     
  • Start by conducting an internet search
    •  
  • Consult national name databases:
  •   Nuans for Canadian corporate names (except Quebec) and trademarks  
  • Or a search for business registry in Nova Scotia, Ontario and Quebec.

You can conduct an online business registry search in:

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You must register any business name that isn't just your given name. This applies even if your business name is your name plus something. For example, "Mark's Catering."  You must register your business names according to provincial or territorial law:

What are some examples of a sole proprietorship?

There are many types of roles that can be a sole proprietorship. Farmers and fishers may operate as sole proprietors. Consultants, shoemakers and more can be a sole proprietorship.

Do you need a business license for a sole proprietorship?

You may need a license depending on what field you're in. Consult the CRA-approved database if you're not sure if your business requires a special permit.

Filing income tax as a sole proprietor

Sole proprietors should fill out a T1 form and benefit return to report revenue and claim business expenses. Calculate net income or loss as part of the owner's income. The CRA requires a T1 return if the sole proprietor:

     
  • Has to pay tax for the year
    •  
  • Disposed of capital property or had a taxable capital gain
    •  
  • Has to make Canada Pension Plan/Quebec Pension Plan payments on self-employed or pensionable earnings
    •  
  • Wants access to employment insurance for the self-employed
    •  
  • Received a CRA request to file a return
    •  
  • Wants to claim an income tax refund, refundable tax credit, or GST/HST credit
    •  
  • Wants to claim the Canada child tax benefit.

Other circumstances may apply to individual situations. Call 1-800-959-5525 if you need clarification from the CRA.

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MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu

If you're self-employed, you're likely a sole proprietor. Here's a walkthrough of the sole proprietor process.

What is a sole proprietorship business?

The CRA defines sole proprietorship as the simplest kind of business structure. It is an unincorporated business owned by one person.  The owner makes all decisions and handles all the profits and losses. The owner does not have separate legal status from the business.

How to become a sole proprietor

A sole proprietor operates as an individual or as a registered, unincorporated business. If you do business as an individual, invoices use your own name.  If your business has a name, invoices use your business name. You'll need a separate bank account if you have a business name.

Choosing a business name

The CRA recommends a few things when choosing a business name:

     
  • Make sure it reflects the product or service
    •  
  • Have an idea of the image you'd like to project
    •  
  • Consider a simple, easy-to-remember name
    •  
  • But be original and make sure it isn't taken!

Is my business name available?

The CRA suggests that you:

     
  • Start by conducting an internet search
    •  
  • Consult national name databases:
  •   Nuans for Canadian corporate names (except Quebec) and trademarks  
  • Or a search for business registry in Nova Scotia, Ontario and Quebec.

You can conduct an online business registry search in:

You must register any business name that isn't just your given name. This applies even if your business name is your name plus something. For example, "Mark's Catering."  You must register your business names according to provincial or territorial law:

What are some examples of a sole proprietorship?

There are many types of roles that can be a sole proprietorship. Farmers and fishers may operate as sole proprietors. Consultants, shoemakers and more can be a sole proprietorship.

Do you need a business license for a sole proprietorship?

You may need a license depending on what field you're in. Consult the CRA-approved database if you're not sure if your business requires a special permit.

Filing income tax as a sole proprietor

Sole proprietors should fill out a T1 form and benefit return to report revenue and claim business expenses. Calculate net income or loss as part of the owner's income. The CRA requires a T1 return if the sole proprietor:

     
  • Has to pay tax for the year
    •  
  • Disposed of capital property or had a taxable capital gain
    •  
  • Has to make Canada Pension Plan/Quebec Pension Plan payments on self-employed or pensionable earnings
    •  
  • Wants access to employment insurance for the self-employed
    •  
  • Received a CRA request to file a return
    •  
  • Wants to claim an income tax refund, refundable tax credit, or GST/HST credit
    •  
  • Wants to claim the Canada child tax benefit.

Other circumstances may apply to individual situations. Call 1-800-959-5525 if you need clarification from the CRA.

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